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House Lawmakers Lining Up Regulatory Relief Bills

Tuesday, July 18, 2017 6:40 AM

After passing a comprehensive regulatory relief package last month, House lawmakers are lining up a series of smaller bills in the hopes it will help enable senators to enact at least some provisions soon.

The House Financial Services Committee held a hearing last week on a series of targeted relief bills, many of which enjoy bipartisan support, and some of which were already part of the larger legislation. The goal is to give Senate Banking Committee Chairman Mike Crapo (R-Idaho) more leeway when he tries to craft a relief measure.

Banking regulators appointed by the Obama administration have also given wary Democrats reason to support some of these efforts. During hearings last week, Federal Reserve Board Chair Janet Yellen endorsed simpler capital requirements for community banks, exempting smaller institutions from the Volcker Rule and changing the test used to determine if a bank is systemically risky.

“There are provisions in the Financial Choice act that can be executed through the reconciliation process,” said House Financial Services Committee Chairman Jeb Hensarling.

Yet the question remains whether Democrats, who are still needed to win the 60 votes necessary for most pieces of legislation in the Senate, are ultimately willing to support any reform effort. Their primary fear is that Republicans may add other bills to any reform package that would assist larger institutions, not small banks and credit unions. If that happens, Democrats may walk away from the reform effort.

It’s a situation that remains frustrating for bank lobbyists. Both political parties agree on some specifics of reform, yet the overall effort remains in jeopardy.

Some Republicans, meanwhile, are pushing their colleagues to go around Democrats entirely. House Financial Services Committee Jeb Hensarling said last week that Republicans could use the reconciliation process, which requires only 50 votes to pass a measure (with support by Vice President Mike Pence), to enact some of the changes included in his comprehensive bill, called the Financial Choice Act.

Yet there are limits on what could be passed that way. The biggest changes appear to be provisions that would defund the Consumer Financial Protection Bureau and scrap the Federal Deposit Insurance Corp.’s ability to seize and unwind failing banks.

But whether Republicans can go that route is uncertain.

“With this White House,” a lot of Dodd-Frank changes can happen, said Hensarling, who also pointed to a recent list of recommendations for financial reform released by the Treasury last month. “Our goals are similar,” Hensarling added. “In some respects the Treasury report is a blueprint for administrative action.”

Republicans are also likely to try and use an appropriations bill in the fall to pass financial services policy riders. That legislation may very well be an omnibus package, stuffing a number of appropriations bills into big one, which often leaves little time for lawmakers to comb through every provision, making it ripe for influential lawmakers to slip in policy riders.